The Law on Value Added Tax stipulates that goods and services of business households and individuals with annual revenue of VND 200 million or less will not be subject to value added tax (VAT).

Before the National Assembly passed the report, on behalf of the National Assembly Standing Committee, Chairman of the Finance and Budget Committee Le Quang Manh said that there was a proposal to consider raising the threshold of non-VAT revenue to over 200 million.

In addition, there are suggestions for a level of around 300 million VND or 400 million VND for the coming years.

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Chairman of the Finance and Budget Committee Le Quang Manh presented an explanation and received feedback. Photo: National Assembly

The Standing Committee of the National Assembly said that the current Law stipulates that the VAT-exempt revenue level is VND100 million/year. According to calculations by the Ministry of Finance, if the VAT-exempt revenue level is set at VND200 million/year, the number of taxable households and individuals will decrease by 620,653 households, and the State budget revenue will decrease by about VND2,630 billion.

If the non-taxable revenue is 300 million VND/year, the number of taxable households and individuals will decrease by 734,735 households, and the budget revenue will decrease by about 6,383 billion VND.

To ensure a reasonable increase in the non-taxable revenue threshold, relatively consistent with the average GDP and CPI growth rate from 2013 to present, the Law stipulates a revenue threshold of VND 200 million/year.

The Government proposes to be assigned the authority to adjust this revenue level in accordance with the socio-economic development situation of each period, to ensure flexibility in management and suitability with reality.

This content was consulted by National Assembly deputies by ballot, with 204 deputies (accounting for 63.35% of the total number of National Assembly deputies) agreeing with the regulation that goods and services of business households and individuals with annual revenue of 200 million VND or less are not subject to tax.

5% tax on fertilizer

The new law also stipulates a tax rate of 5% applicable to fertilizers, ores for fertilizer production, pesticides and animal growth stimulants as prescribed by law.

According to Chairman of the Finance and Budget Committee Le Quang Manh, many opinions agree with the proposal to impose a 5% tax rate on fertilizers.

Some opinions suggest keeping the current regulations (no tax rate); some opinions suggest applying a tax rate of 0% or 1%, 2%. Some opinions suggest a comprehensive assessment of the impact of this regulation on farmers and agricultural and aquatic production. Some opinions are concerned about the possibility of businesses taking advantage of the policy, raising prices, affecting farmers.

The Chairman of the Finance and Budget Committee said that if the regulation applies a 0% tax rate to fertilizers, it will ensure benefits for both domestic fertilizer producers and importers because they will be refunded the input VAT they have paid and will not have to pay output VAT. However, the State will have to spend money every year to refund taxes to businesses.

Applying a 0% tax rate to fertilizers is also contrary to the principles and practices of VAT, which is that a 0% tax rate only applies to exported goods and services, not to domestic consumption.

In addition, applying in this direction will break the neutrality of tax policy, create a bad precedent and be unfair to other manufacturing industries.

The regulation of a tax rate of 1% or 2% for fertilizers is also inconsistent with the goal of VAT reform, which is to reduce the number of tax rates, not to increase the number of tax rates compared to current regulations.

On November 26, the Secretary General of the National Assembly sent a request for opinions from National Assembly deputies on two options: one is to apply a 5% tax rate, the other is to keep it as it is (no VAT).

72.67% of the total number of National Assembly delegates agreed to impose a 5% tax rate on fertilizers, machinery, specialized equipment for agricultural production, and fishing vessels.

5% VAT on fertilizer, each farmer pays an additional 38,000 VND/month

5% VAT on fertilizer, each farmer pays an additional 38,000 VND/month

Minister Ho Duc Phoc said that when levying a 5% VAT on fertilizers, if calculating the tax refund for businesses of 1,500 billion VND, the remaining 4,200 billion VND is assessed to impact 9.1 million people, then each farming household will pay an additional 461,000 VND per year, and an additional 38,000 VND per month.